April 11, 2013
For Contractor in Special Ed, Huge Fees and Poor Care
By DAVID M. HALBFINGER

Cheon H. Park ran a company that had begun to prosper on government contracts, but he had bigger ambitions. So he tore down his shabby headquarters on a quiet street in Flushing, Queens, and replaced it with a lavish three-story building that had marble floors, granite countertops, red carpets and a soaring chandelier.

Then he brought in the clients: 3- and 4-year-olds with developmental disabilities.

Scores of them came each weekday, their parents lured by the attractive surroundings and the promises of state-of-the-art therapy. New York City and New York State paid for it all, from the expensive renovations to the services themselves, at a rate of as much as $98 an hour.

But many of the children entrusted to Mr. Park’s company did not get the care they needed, according to numerous interviews with workers and parents and an extensive analysis of government records.

Some children whose first language was Chinese languished in classes taught in Spanish or Korean. Others who were supposed to receive individual tutoring were thrown into groups of four or more children, all with different types of disabilities.

Some children did not have disabilities at all and were simply being used to generate billings, the interviews show.

“We had kids who were little rocket scientists being put in there — who could read and write at a third-grade level,” said Angel Tirado, a former aide to Mr. Park.

Mr. Park’s contracts were canceled by the city at the beginning of this school year after The New York Times questioned officials about his company.

But his success until then underscores how private contractors have taken advantage of this generously financed but poorly regulated segment of the special-education system, often called special ed pre-K, according to an investigation by The Times.

At Mr. Park’s company, the costs to treat these 3- and 4-year-olds were enormous. The government routinely spent more than $50,000 in a single year on services for one child, according to an analysis of billing records.

In all, that occurred 281 times from 2005 to 2012, the records show.

The money went to Mr. Park’s company, Bilingual SEIT, and other providers of related services, including contractors that transported children to his schools.

In the 2011-12 school year, Bilingual SEIT billed more than $17 million to the city and state, up from $725,000 it had billed a decade earlier.

As his revenue grew, Mr. Park bought a 5,000-square-foot house behind high walls on the North Shore of Long Island, and used city and state funds to buy a Mercedes for his 20-minute commute.

The special ed pre-K program provides services for 3- and 4-year olds with developmental disabilities, which include autism. Some children have difficulty communicating, learning and socializing. They may also have problems with cognitive and motor skills, like picking up objects.

The state and its localities together spend more than $2 billion a year on the special ed pre-K program, which has doubled in size over the last decade and is by far the most expensive, per child, in the country.

In New York City, annual costs total $1.2 billion, about 6 percent of the $19.8 billion overall education budget. The state and city jointly supervise the program, with the state paying 60 percent of the cost and the city paying the rest.

The growth in spending has been prompted in part by more awareness of autism, but officials acknowledge that services for children with autism account for only some of the increase.

Supporters of the program said it represented a crucial early investment that pays off in better educational results as children mature.

They maintained that fraud was rare but was giving the program a bad name, unfairly raising doubts about the motivations of hundreds of upstanding contractors. And they said measures to crack down on waste and abuse were making it harder for qualified preschoolers to obtain the specialized instruction and treatment they need.

Yet The Times found that a network of contractors has arisen that routinely bill for questionable services.

The Times’s investigation drew on interviews with more than 50 former workers at Mr. Park’s company, including teachers, therapists, administrators and clerks. Parents, city and state education officials, state auditors, and executives and workers at other contractors in the industry were also interviewed.

The Times analyzed a decade of billing records and financial statements from Mr. Park’s company and many others, and examined thousands of pages of government records.

Billing fraud appears to be common. Some contractors labeled overseas vacations and spa trips as business travel, or used corporate credit cards for jewelry or groceries. Others hired relatives for no-show jobs, or gave themselves exorbitant salaries and perks like fancy cars, even as they seldom showed up for work. One contractor put a grown son on the West Coast on the payroll, claiming he had opened a satellite office there. Another contractor lived out of state herself.

The bar to entry was low. One preschool contractor had a previous career in Medicare fraud, federal records showed. Another was convicted of weapon possession and workers’ compensation fraud.

State and city education officials said The Times’s findings were troubling.

“This is a program in serious need of reform,” the state education commissioner, John B. King Jr., said. “A few very bad actors are stealing from taxpayers and hurting children.”